The amendments require all joint stock companies, regardless of the chosen type of shares, to submit information on shareholders to Latvian Register of Enterprises. Information on holders of registered shares must be submitted to the Register of Enterprises as soon as changes are made in the register of shareholders. In turn, a joint stock company whose shares are registered in financial instruments accounts must provide information on the largest shareholders in the Register of Enterprises, and this must be provided as soon as the shareholders have informed the joint stock company about the acquisition of shares.
Changes in Commercial Law regarding Joint Stock Companies in Latvia
At the end of June, there have been amendments made to the Commercial Law of the Republic of Latvia in order to reform and facilitate the regulation and transparency of existing companies.
The existing legislative framework permitted joint stock companies in Latvia to withhold certain information about their shareholders from public authorities, which makes it feasible for dishonest and criminal behaviors including money laundering, tax fraud, and corruption.
Additionally, due to their limited transparency, joint stock companies are usually classified as high-risk entities in the Latvian National Risk Assessment Note.
How will the changes affect existing joint stock companies in Latvia?
The amendments require all joint stock companies, regardless of the chosen type of shares, to submit information on shareholders to Latvian Register of Enterprises. Information on holders of registered shares must be submitted to the Register of Enterprises as soon as changes are made in the register of shareholders.
In turn, a joint stock company whose shares are registered in financial instruments accounts must provide information on the largest shareholders in the Register of Enterprises, and this must be provided as soon as the shareholders have informed the joint stock company about the acquisition of shares.
At the same time, the amendments provide for a number of innovations aimed at modernizing and facilitating the procedures of both joint stock companies and limited liability companies. The amendments modernize the procedure for convening shareholders 'meetings, as well as the availability of documents for shareholders' and participants 'meetings and the procedure for shareholders' meetings, for example by providing documents for shareholders 'and participants' meetings primarily in electronic form at the company's registered office or virtual office meeting rooms.
Useful information for existing and future joint stock companies in Latvia:
• Amendments to the Commercial Law are made to ensure the transparency of the shareholder structure of joint stock companies.
• A joint stock company may have only one type of shares - either registered shares or bearer shares.
• All capital companies must have fully paid-up share capital by submitting an application for registration in the Register of Enterprises.
• The law modernizes the procedure for ensuring the availability of shareholders' meeting documents by shifting the emphasis to the availability of meeting documents in the electronic environment.
• If the participant (shareholder) does not provide the company with information about its true beneficiary for a long time and does not apply to the Register of Enterprises with such an application, the company may request the court to exclude the participant (shareholder) from the company.
When the new requirements are in force?
In order to allow joint stock companies to provide the Register of Enterprises with all relevant information throughout the year, the amendments are scheduled to go into effect on July 1, 2023, giving a period to adjust to the new regulatory framework. Joint stock companies who have disregarded this requirement and haven't revealed their shareholders risk being terminated and excluded from the commercial registry.
Having problems with ensuring compliance with the new legal requirements in Latvia?
EU LAW FIRM has more than 14 years experience in business setup services and company formation in Latvia. We provide company owners and organizations advice on the best solutions suited to their individual needs.
For legal guidance, contact EU LAW FIRM lawyers in Latvia.
Contact EU LAW FIRM lawyers in Latvia.
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